Miscellaneous expenditure now written off

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This discussion clarifies the accounting treatment for miscellaneous expenditure, such as preliminary or preoperative expenses, under the Companies Act, 2013. While amounts to be written off in the next financial year might be classified under current assets, the general principle is that such expenses are typically shown under 'other non-current assets' on the balance sheet. Amounts written off annually should appear in the statement of profit or loss, or alternatively, the entire expense can be written off in the year of occurrence as per AS-26.

Chaitanyaa

Chaitanyaa (Querist)
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12 January 2022 As per companies Act-2013, where are miscellaneous expenditure not written off ( like preliminary expenses/preoperative expenses) are shown in which asset and which subhead?

CA Puja Sharma

CA Puja Sharma (Expert)
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12 January 2022 The amount which is to be written off in next FY to be shown under current assets and the rest of the miscellaneous expenditure to be reported under Non Current Assets

Chaitanyaa

Chaitanyaa (Querist)
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12 January 2022 Kindly clarify as why the amount to be written off in next FY is shown as current asset as what i know is current assets are assets which are converted in cash within one year so how it can be a current assets?. Please guide.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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16 January 2022 Miscellaneous expenditure may be shown in the balance sheet (Schedule III part-1) under the head 'other non current assets'. Amount w/off yearly may be shown under 'other expenses' in 'statement of profit or loss'(Schedule III part-II). Alternatively, fully w/off such expenses in the year of occurrence as per AS-26.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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16 January 2022 Your understanding is correct per Instruction 1 of General instructions for preparation of Balance Sheet given in Schedule III.

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